Good afternoon or good morning, everyone. Thank you for joining the second session of our Capital Market Day twenty twenty, the presentation of our Automotive and Discrete Group, ADG. Today, Jean Marc Sherid, the Chief President and Chief Executive Officer, will start with a brief introduction of the session. Then Marco Monti, our President in charge of ADG, will go through the presentation of his group. It will be followed by a Q and A session, where Jean Marc and Marco will be joined by Lorenzo Grande, President of Finance, Infrastructure and Services and Chief Financial Officer and Marco Cassis, President of Sales, Marketing, Communications and Strategic Development.
I would like to mention here that due to the current sanitary situation, we have decided to adjust our setup to accommodate appropriate social distancing. As a consequence, we will ask the Q and A using only audio. As usual, a few housekeeping items before we start. This live webcast and presentation materials can be accessed on Investor Relations website. A replay will be available shortly after the conclusion of the event.
This presentation will include forward looking statements that involve risk factors that could cause ST's results to differ materially from management's expectation and plans. We encourage you to review the Safe Harbor statements in ST's most regulatory recent regulatory filings for a full description of these risk factors. Also to ensure all participants have an opportunity to ask questions during the Q and A session, please limit yourself to one question and a brief follow-up. Now before I turn the floor over to Jean Marc, ST's President and CEO, let's go with a video as a reminder of our key strategic objectives.
Good afternoon or good morning to everyone. It's a pleasure for me to be here to introduce the second step of our Capital Markets Day focused on the Automotive and Discrete Group. This comes after an extensive round of the communication for our third quarter earnings where we have discussed already in detail what we are seeing in terms of current market dynamics, especially for Automotive. During today's presentation, we will touch again on the short term dynamics but we will also focus on the mid- and long term perspective and the related actions. So let me briefly recap on the short term.
In Automotive, as you know, global demand pick up faster than what we expecting in July. This acceleration was driven by car production volumes, which continued to increase in China and cross Korea and are restarting faster than expected in Europe and in The US. The legacy part of our Automotive business is more closely tied to car volumes. This part was heavily impacted in Q2 by the lockdown. Then in Q3, we saw better than anticipated recovery in car production.
Today, see a run rate of car production close to twenty nineteen levels. You will see in Marco's presentation that also car sales, which are regularly tracked by industry analysts, are following the same trend. Clearly, we cannot say if this is a sustainable trend. Our Q1 view for car production in 2020 is to be in the range of 75,000,000 cars and in 2021 in the range of 80,000,000 to 85,000,000. So looking at the mid and long term, we see clearly instead an acceleration of the transformation of the car industry towards safer, greener and more connected solutions.
As a result, the megatrends of electrification and digitalization are also accelerated. They are the driver of increased semiconductor content in the car and remain long term growth drivers for us. You will see soon from Marco's presentation that the key asset ST has and the actions we have taken to leverage these accelerated trends. In Electrification and this is valid both for the Automotive and the Industrial end markets, we now have the full set of power technologies to address the needs of our customers: Wide band gap materials with silicon carbide and gallium nitride and silicon with IGBT and high and low voltage MOSFETs, which we offer in a wide range of packaging options, including modules, both standard and custom solutions. In digitalization, for ADAS, we rely on our strong partnership like the one with Intel Mobileye for vision based processors and Autotalk for V2X connectivity, while leveraging our other product families, RADAR, Incubine Monitoring.
We also addressed the needs of new vehicle architectures with our stellar microcontroller family in legacy Automotive. We have taken action to adapt our business model, aiming at increasing our market share in Distribution and moving the business model with some OEMs from COT ASIC to more ASIC ICSP. In Marco Monti's presentation, you will see how ADG contributes to ST's strategic objectives. You will also see first that over the last three years ST has managed to grow faster than the market in Automotive second, how Redigi has anticipated the market requirements focusing on smart mobility applications driven by electrification and digitalization and on power technologies, supporting also our strategy in Industry. Third, the actions that ADG has taken to reshape R and D investments in these strategic areas and to capture all benefits from the acceleration of the electrification and digitalization trends.
And now, let me hand over to Marco.
Good afternoon and good morning to everyone. As Jean Marc just mentioned, in my presentation you will see how ADG contributes to the ST strategic goals to be leader in automotive and industrial market. This, thanks to our specific focus on electrification and digitalization and integrated solution to serve power and energy conversion. Let me start with a quick overview about ADG and how we have performed versus the market. ADG represents more than onethree of the ST business and, in particular, 68% of ADG revenues are in Automotive, where we cover substantially all applications with a wide technology portfolio.
Industrial is the other major focus area and here we serve the market with our power and discrete products. In the first nine months of twenty twenty, ADG had $2,330,000,000 in revenues. After a difficult market condition in Q2, ADG came back to 17% sequential growth in Q3 but still down 4.9% year over year. This is very much in line with the automotive market dynamics. If you consider Kelsey's global demand picked up faster than expected starting from July and electrified vehicles has been a strong driver for this growth.
In September, car sales grew to 7,000,000 units coming back to the level of 2019. As a result, the revenue of ST Automotive Group increased 30% sequentially with microcontroller and smart power growing sequentially about 3540% and ADAS maintaining a solid sequential growth of about 15%. I would like to describe now our performance versus our competitors. ST is the only company among the top automotive players that grew in average in the last three years by more than 10% per year. The industry in the same period grew by 5% and the top three players by 2%.
Also, analysis suggests that ST gained again market share in Automotive in the 2020 driven by our effort on electrification and ADAS where we clearly outperformed the market. So now I would like to take you back to what we presented at our twenty nineteen Capital Market Day. A few things in our market have changed since then and others remain unchanged, but the dynamics of the market confirm the fundamental of our strategy. The choices we have made have been confirmed to be the right ones, and this put us in the position to plan for incremental steps to better adapt to the changing environment. In more details, what remained the same in the market?
Clearly, the overall trends towards smart mobility driven by electrification and digitalization of vehicles has remained strong. This requires, on one hand, power product, a trend we see not only in automotive but also in the industrial market. On the other hand, it requires digital products adapted for car, which are more connected, safer and with an architecture more suitable to support these features. These trends are pushing the car semiconductor content, partially compensating the reduced car volumes, which were strongly impacted by the macroeconomic dynamics. But at the same time, the market had some changes.
The pandemic related lockdown reduced the ability of the carmaker to produce in 2020, impacting their sales and their capability to invest. The reduced budgets of the automotive industry had a visible effect in delaying many programs for full autonomous driving. But at the same time this pushed the provision of mid level L2 plus plus ADAS system to entry level car models. We also noticed that the trend over electrification has continued at full speed. The dynamics of the market substantially confirm our strategy but require some additional action that I will describe in more detail shortly.
So what remain unchanged in our strategy? First, our strong commitment to automotive industrial market second, our investment in technology and innovation with a special focus on power technologies and third, our ambition to lead in smart mobility and in contributing to make industries smarter, greener and more efficient. Importantly, the pandemic do not compromise our customer engagement, innovation speed and R and D execution. But what we decided to change? The reduction of car sales generated pressure on traditional automotive products that are still an important part of our portfolio.
To anticipate this, we decided to strategically accelerate the investments to support the automotive macro trends with action that I will soon describe. In particular, we strongly accelerate our R and D programs in Cara Electrification, extending our product portfolio, including silicon based and new material solutions. As an example, we added in our product portfolio PowerGAN products with a new specific focus on this disruptive technology. In thermal market, Asia became even more important on our strategy and we established partnerships with the Chinese leaders in electrified mobility. Let me now move to our market expectations in the near and mid term.
The market recovery after the lockdown is visible now and we are back to the pre pandemic rate in term of car sales. Based on what we see in term of customer dynamics, we are slightly more optimistic than the current analyst views. We believe that in 2021, car sales will be closer to the 2019 level. One important factor substantially confirming our strategy is that despite the overall negative trend for car sales in 2020, electrification and ADAS are consistently growing. In fact, while internal combustion engine car volumes declined by 20%, mild hybrid grew by 85% and full electrical by 35%.
At the same time, while low end ADAS declined by 20%, in line with car sales, Level two plus plus grew by 12%, confirming the provision of this application in a larger range of car models. As a consequence, the good news is that the low level of cars sold did not impact the importance of the automotive trends, confirming them as the main driver for semiconductor market growth. To confirm this, the electrification related semiconductor TAM will grow to more than $5,000,000,000 and for ADAS to about $9,000,000,000 by 2023. So what about the impact of these market dynamics in our strategy? During our last Capital Market Day, I mentioned our strategy to concentrate our efforts on the new automotive trends.
We made this choice in order to reach within five years at least fifty-fifty share on our revenues with seventy-thirty being our starting point. Today, thanks to our action, we are ahead of our plan. At the 2019, we were already at 60 five-thirty five, and our goal is now to be at fifty-fifty in less than three years. This will boost our revenues, improve our profitability and it will make our sales less dependent on car volumes while benefit more from silicon pervasion. To achieve this goal, we took three major actions that I will now describe.
First, we increased our innovation effort in traditional automotive technologies. Here, we are constantly moving the focus from traditional application to innovative systems, like, for example, solutions for EV battery management, drivers for our power components or power management for ADAS products. Second, we have expanded our product offer to better serve the new automotive trends, leveraging a disruptive technology portfolio. A few examples are our diversified silicon carbide portfolio, the new product offer on PowerGAN, the extension of the microcontroller Stellar family, addressing now multiple applications. Third, we deployed resources from automotive legacy product to expand our product coverage on new technology like GaN, SiC All Low Voltage PowerMOS.
As an example, to the experience gain on plan on technology like our VCD, we gave a strong impetus to our GaN product roadmap. Also, we extended our market coverage in Asia with a new dedicated local R and D and application team to leverage customer intimacy. These three actions are progressively moving our R and D investments to support the new growing trends. R and D to serve a radical innovation now represent about 60% of the DG global spending, while just few quarters ago, it was about 30% of the total. Let me better detail the action I just described, giving you some color on three technology clusters: Smart Power, digitalization technologies and power.
Starting with smart power. Here, as I mentioned, we are accelerating our focus on new and fast growing applications. A first example is intelligent battery management products ranging from 48 volt hybrid vehicles to full electrical ones. A second example is our smart power driver for IGBT and silicon carbide MOSFET, specifically designed for functional safe automotive application. The third one is power management products for ADAS processor, like the companion chip for our IQ family.
Moving now to card digitalization. So what the market is asking for in this field? I can simplify in four cluster: First, Level two plus plus ADAS system to equip from high end to entry level cars. We estimate that by 2025, more than 40% of vehicles will be equipped with these systems. Second, ADAS supporting full autonomous car, for example, for Robotaxi, where the semiconductor content could exceed the $5,000 Third, microcontroller to serve as software friendly vehicles.
This is an important breakthrough in the automotive industry because it will drastically reduce recall by enabling software upgrade over the year. But as a consequence, it will require a drastic architectural change. And finally, car connectivity to use the huge amount of data available to improve safety and driving experience, also enabling Mobility as a Service. Our strategy in digital product is perfectly matching these market requirements. In Level two plus plus ADAS system, we are a third year partner with Intel Mobileye for IQ products.
We already sold over 54,000,000 units. And in this area, we are the market leader. Now we complement our offer with RADAR solution, including FDOso IRF receiver and transmitter and with dedicated microcontroller from the Stellant family. For full autonomous driving, we are developing the next generation IQ family based on five nanometer FinFET technology. Also, our TEZIO solution for precise satellite positioning is instrumental in supporting full autonomous driving.
In microcontroller, I'll give you more detail later, but here I just want to mention that our ARM based Stellar family is now adopted by multiple partners like, for example, BMW. In infotainment, I want to mention our Telemaco family, extremely successful in supporting multi standard connectivity in the car. As I described before, the change of the car architecture is a key breakthrough for the automotive industry. It brings several advantages like the simplification of the software, the over the air reconfiguration. It will contribute to increased safety and the optimization of fuel consumption reducing the car weight.
The change of the architecture had two major impacts in the semiconductor market, one related to microcontroller and the second to smart power products. In fact, the new architecture needs much more complex microcontroller with very high computational power and with an embedded memory capable to implement the software flash without interrupting the current functionality. This high performance microcontroller will generate a higher TAM versus today with an estimated 30% increase in microcontroller value. Second, the Smart Power portion will significantly increase in value. In fact, the new architecture requires dedicated power management lines for each domain, and these lines must be protected and robust against possible malfunction to assure the proper safety of the system.
This totally new product will significantly increase the smart power TAM by more than $1,000,000,000 in our estimation. Also in this case, our strategy is perfectly matching and anticipating the need of the new car architecture. For microcontroller, our STELAR family is built to satisfy the new system needs. 28 nanometer DSY permits high frequency operation. This grant the computational power need for concurrent software execution in the multiple core structure.
The PCM embedded memory enable fast access time and robustness, at the same time permits over the air software update without interrupting software execution. As you may have seen in a recent joint press release, our Telar family has been endorsed by Bosch, an automotive market leader and a solid ST partner. The same in Smart Power. Our new M11DI Power family perfectly fits the in vehicle power grid requirement. It is capable to protect the different domain of the car, controlling the current and, at the same time, minimizing the cable size.
This will significantly contribute in reducing car weight and then fuel consumption. We are already engaged in several customer programs in this area. Before opening the chapter of our offering power technologies, let me just share a high level view of the wide product offer to serve electrified mobility beyond silicon carbide. I'll just give you a few examples for the benefit of time. Our IGBT family perfectly complements our silicon carbide products, serving application like cost effective inverters.
In this area, our strategy on power modules is very well defined, with an offer covering both silicon carbide and silicon based solution. To properly serve the market, we have standard automotive modules like SPAC and SPAC drive made in our own plants. This strategy is complemented by partnerships with the leading module maker for high specialized power solution. In this area, I am pleased to disclose our partnership with the power module market leader, SemiChrome, to both IGBT and silicon carbide solution. I also want to mention our specific offer in microcontrollers tailored to support electrified car.
Let me now open the chapter of power technologies that are strategic for the market we want to serve. In fact, in automotive, Power Technology will represent a TAM of $8,000,000,000 by 2024, with silicon carbide and LGBT growing more than average. Also in industrial, power products are key. In fact, there are several applications where they represent more than onethree of the total semiconductor bond. So I'm sure it's clear that power products are strategic for a market leader in automotive and industrial.
Thanks to the investment we made in the past, complemented by our most recent actions, our offer in power products is very wide, covering silicon based and new materials to match multiple application requirements. We have also a well defined and very competitive manufacturing strategy. Silicon MOSFETs are made in multiple 200 millimeter fabs. IGBT is in 200 millimeter today and it will move to 300 millimeter in Nagratte. Silicon carbide is today in two fabs at 150 millimeter that are already compatible with the 200 millimeter process flow.
About GaN, I will describe our manufacturing strategy in a while. Let me start with silicon carbide, giving you a quick update on our activity. Today, we are the market leader in automotive and industrial applications. We are accelerating our award rate with more than 68 active programs, equally split between automotive and industrial. For this aspect, we are today partner many market leaders in automotive and industrial with high volumes production programs.
In this chart, you have just some of those that are supporting our ambition to reach $1,000,000,000 by 2025. Our market success is driven by more than twenty years of innovation with the best technology of the market today in term of performance and cost. Because we already reached manufacturing yield in line with Standard Power Technologies, we are very confident in our ability to keep our competitiveness also in the future. I want also to update you on our activity on silicon carbide, supporting our ambition to be vertically integrated, including substrates and MOSFETs. Our plan is to have at least 40% of our production vertically integrated by 2024 with a program in advanced phase of execution that I will disclose in detail in the next few months.
Let's now move to gallium nitride, another disruptive power technology where we recently increased our focus. Thanks to our most recent action, our GaN product coverage is now very wide. We already disclosed our partnership with TSMC on six fifty and one hundred volt applications that complements our internal development, ensuring the right time to market. More recently, to increase our product portfolio, ensure the right IP setup and shortening the pathway volumes, we acquired a GaN leader, Hexagon. This acquisition boosts our application coverage and provide access to already engaged customers.
I want to assure you that our ambition on GaN based product is very strong, and we plan to cover many applications from automotive to industrial to personal electronics. To fulfill our leadership ambitions, we have set up a manufacturing strategy based on two different paths. At 200 millimeter, with our proprietary technology in the manufacturing line, we are bringing in our existing plant in Tours, France, leveraging already available competencies. This is complemented by a 150 millimeter manufacturing activity in TSMC using the technology where we are cooperating. I cannot leave the subject of high power technologies without briefly mentioning our activity on IGBT that is complementing our silicon carbide strategy.
I need to stress that despite the strong success of silicon carbide, IGBT is and will remain an important technology. First, because it perfectly fits some cost effective consumer industrial application, like, for example, induction heating or home appliance. Second, because also in automotive, there is still room for entry level solution based on traditional silicon. For the reason, we push innovation on trench IGBT technology in order to have multiple competitive process options to fit different application needs. Without going too much in detail, we specialize our IGBT technology to cover application from the cost effective induction heating to home appliance automotive.
In our LGBT portfolio, we have now more than 600 products, and we are constantly enlarging our offer to support our goal to grow 3x faster than the market in the next three years, keeping the pace we have had since 2019. Before concluding, I just wanted to give you one last example of our strategy in Power Technologies, low voltage PowerMOS. This technology is strategic for the simple reason that in industrial market, we see the same trend toward electrification that we have seen in automotive. Most professional industrial tools are now converted to be battery operated, where in the past, they were mains operated. To support this conversion, low voltage power MOS are key.
In fact, the TAM of this product is forecast to represent about 60% of the total semiconductor BOM in professional tools. In this product category, thanks to the already secured business, we plan to keep growing at the same pace we had in the last few years. To conclude, despite the pandemic that strongly penalized our automotive market in the 2020, ADG managed to grow faster than the market across all applications. We have anticipated the market requirements. We focus on smart mobility application driven by electrification and digitalization and on power technology supporting our strategy in the industrial market.
And we have taken action to reshape our R and D investments in these strategic areas. Thank you.
Thank you, Marco. We will now start the Q and A session that, as a reminder, will be audio only.
The first question comes from the line of David MacFarlane from UBS. Please go ahead.
Hi, thanks for taking the questions. Just two if I can squeeze them in. Just coming back on the comment you made on the IGBT business in orders and potential to grow three times faster than the market growth. Can you just help us understand how big is that business growing for you today? And just in dollar terms, just so we can put that in some context of the market.
And where do you think you're making the biggest inroads in terms of gaining penetration in the market? And then secondly, on silicon carbide, obviously, you've done very well getting established with Tesla, and there's a lot of opportunity for the market to grow going forward. But obviously, as this market matures and we start seeing more customers coming along, traditionally, there's a lot of fuel sourcing in the automotive market. So how do you see the kind of risk? Obviously, there's opportunity with all the other customers that you're working with.
But is there any risk that, that customer may look to dual source the future even on silicon carbide?
Yes. Thank you for your question. It's Marco here. On IGBT, today we are starting from a base of, let's say, 150, if you consider what we do in Automotive and Industrial. And let's say, as I mentioned in the presentation, our ambition is to grow, let's say, by 2025 exceeding, let's say, 300,000,000.
So you see that the growth is particularly wide and this is including pure silicon based or module based solution. I would say that the growth is equally split between automotive and industrial application. In automotive, clearly, what we are serving with AGBT is entry level, let's say, solution for our main inverter or even two axis electrical engine car, for example, that need in the front axis silicon carbide in the back axis IGBT solution. In Industrial, there are plenty of solutions for which we are covering with our IGBT technology moving from six and fifty thousand to 1,200 to 1,700 volt. In terms of silicon carbide, yes, let's say, normally silicon carbide solution are highly specialized because as you know to obtain the maximum from say silicon carbide solution, you need to work very tightly with the system maker or even better with the carmaker in order to have an optimized solution versus the system of the carmaker.
So this is an area where honestly a double source is very much questionable because again the solution is very much customized. And we have visibility of course, we are playing in automotive. So there is a very well visibility on what will happen in the next few years. So let's say the part that we described, the $1,000,000,000 by 2025 is very well sustained by solid business award that we have today across our customer portfolio.
Can I just follow-up on that then? Just in terms of the engagements that you have elsewhere beyond your largest customer, how do those break down between who you're working with? How much connection you have all the way through to the OEM? And in terms of the design of those solutions, are they following a similarly customized approach? Or are we starting to see some more standardization?
And I guess more is it still discrete products? Or is it more module solutions that are starting to be looked at in obviously, for production two or three years' time from now?
No. To be honest, we see the opposite. We see more and more fully customized solution. We have, of course, the programs are running with the usual Tier one that we have in our customer base. But more and more, we see carmaker directly involved.
And we have even cases for which we are supplying just, let's say, silicon dies to our customer and they will use their internal capability to build the fully customized modules. So as you see, the offer is very well diversified. Carmakers for sure are very much involved in this approach even if sometime again as I mentioned that they are Tier one involved. And again, there is a real big variety of solution that again are more and more push on the full customization.
That's great. Thank you very much.
You're welcome. Thank you, David. Next question please.
The next question comes from the line of Aleksandr Petter from Societe Generale. Please go ahead.
Yes, good afternoon and thanks for the question. I just have a few. First one, could you give us a kind of a broad outlook for automotive semis, where you see this market growing, say, in terms of CAGR over the twenty twenty to twenty twenty five period or something similar? And by what percentage points you think you can outperform overall automotive semi market growth? And then the second question, maybe it's a bit early to see that, but do you see an increased competition from the Infineon plus Cypress combination?
Or is that not a factor in the markets we're discussing here? Thank you.
Let's say, in terms of market dynamics, as you can clearly understand, it's quite difficult to comment in these days because unfortunately, we suffered in H1 from a major reduction of cars production. So this is clearly, let's say, changing the completely the level of statistics. As mentioned in the presentation, we think we'll go back in 2021 more or less for the similar of 2019. On this perspective, we think that the market will evolve from let's say a compound average growth from 4% to 6% in the next few years. What is clearly visible is that more and more the market and you clearly see a reflected in our strategy, the market will be driven by the provision of silicon more than car volumes.
We substantially model our evolution in term of, let's say, revenues more or less having almost a flat level of car sales for the next few years, again, plusminus. And then what will drive dramatically the market dynamics will be the silicon preservation. Then clearly electrification and digitalization as we try to represent in the presentation will be the major driver because this is the content that is boosting semiconductor operation in the CAM.
The competition?
Yes. On competition, clearly, we respect all our competitors and particularly we respect a lot of the competitors that you mentioned. Think we have the elements to keep growing at our pace and hopefully to keep over performing the average of the market. So I think we have clearly the elements to keep growing again even if of course we respect the competitors. And I would say that in a recent add on in our strategy in powers including new materials like silicon bioclear, but also GaN product will clearly boost the sales in the next few years hopefully, we're performing keep over performing
Yes. Jean Marc speaking, okay. And for the other, let's say, product line and overall under the Processing Solutions, addressing mass market, other industrial and so on, we don't see yet, okay, any effect, okay, it's too early to measure.
Thank you.
Thank you, Alexander. Next question please.
The next question comes from the line of Achal Sultania from Credit Suisse. Please go ahead.
Hi. Good afternoon. Thanks for taking the question. First one is on this again silicon carbide opportunity. I guess when we think about some of these car companies that you have partnerships with, and there have been a few in public domain now like Hyundai and Renault, Nissan and BYD.
Can you just help us understand how should we think about the timing of the ramp of some of these projects? And what kind of solutions are you providing? Is it more around onboard charger? Is it more inverter? Any color around that would be helpful.
And then secondly, on the margins, when we look at ADG, it's still the lowest margin group within the whole company. So how should we think about the margin profile given that there are clearly structural growth drivers? What's the key driver for growth or improvement in margins going forward? And does some of these new products like GaN or silicon carbide, are they going to be margin dilutive over the next few years or similar to group average or not group average,
but auto average? Thank you.
Well, let's say, above your first question on silicon carbide, clearly, show a portfolio of customers that we have. Some of those are, let's say, already in production. Some of those are ramping up in volume in Q4 this year and some of those will ramp up production across 2021. I would say that in automotive, the major ramp up on new customer you will see in Q4 this year. Application are the one that you mentioned substantially.
So of course, the major one also in term of, let's say, quantity of silicon is main inverter of the car for both, let's say, electrical car and for a few example of hybrid cars. The other big area where silicon carbide is clearly giving a strong benefit is in the area of the DC DC converter. And then, of course, onboard charger, again, if we remain in the automotive application, if you want to extend a bit on the industrial application also the infrastructure. So the charging station in the infrastructure is also a potential good example of application where silicon carbide is clearly boosting the solution. In terms of profitability, before probably to leave to Lorenzo, just one reminder, ADG is a combination of multiple product segment.
We have a rich application like ADAS again electrification, for example. And also we have a consistent business that is serving pure commodities like we have in our discrete family. So of course, the result of the profitability of the group is also the combination of these product family and at the end across the market dynamics, is the performance.
Yes. Maybe I can add something here, Mark, if you allow me. For sure it's true that in this moment the ADG is a segment is a group in our portfolio that is suffering more. As I was let's say underlining the explainer during other occasion that we had to discuss together. For sure today, one of the impact that we are suffering in KDG is the impact that we have on our legacy fab on our legacy, let's say, production manufacturing in which what we have seen today is definitely a significant decline in legacy products creating unloading, but also creating an efficiency.
The combination of growth, let's say, on new product driven by as what explained by Marco. And on the other side, let's say improvement in this manufacturing portion of our footprint manufacturing footprint that will a combination of course of increased demand and now we are really in a low end part of the demand and the change of some mix inside this manufacturing will improve, let's say, the efficiency. This combination will definitely be the driver for our expected growth in term of profitability. The main portion that will drive this improvement in profitability in a way is expected to come in term of operating margin from the power let's say portion of our portfolio. This will definitely be the one that will increase more during the time frame of our plan.
Thank you, Louisa.
Thank you, Achal. Next question please.
The next question comes from the line of Sandeep Deshpande from JPMorgan. Please go ahead. Yes. Hi. I have two questions,
if I may. A couple of questions. I mean, firstly, regarding the ASIC business in automotive that you do, for instance, with Mobileye and with others. I mean, how do you see development occurring in that business today? Clearly, you have major wins there already.
But are those customers continuing to design future generations of products with you such that this business remains continuing that they don't move this business to somebody else in the future? And then secondly, regarding the silicon carbide business, my question would be that when do you see the next big customers starting to ramp up in silicon carbide? You've already signed up with a bunch of other customers beyond your lead customer in the automotive market. But when do you expect substantial revenue to start to come from those other customers?
Well, let's say, Saliv, your first question on ASIC, no, we will let's say, there is no, of course, plan to reduce our exposure to, in particular, digital ASIC for automotive. We see more and more instead full customized solution in the area of ADAS for automotive. So again, the relationship with Mobilize is extremely good. As I was trying to describe in my presentation, we are keep working on the next generation L2 plus plus ADAS, so the IQ six into different configuration. And we are already planning to move on the next generation that will be a five nanometer FinFET technology product to, let's say, drive the full autonomous mobility.
So again, we will continue to work. Mobilize as you know is one example of the portfolio of customer we have in this area. We are diversifying also our offer. Of course, we count on specifically on Mobilize that is today market leader is with them we have more or less 70% in the vision based solution for ADAS. We are also working on specific ASIC for radar application in our IPSY technology.
So again, we don't see a reduction of the momentum in this specific area. About silicon carbide, again, as
I
mentioned, momentum is extremely strong. So today, we do not see more the need to if you want promote the concept or the advantages of silicon carbide against the traditional technology. So we have already a large portfolio of customer on which we are working on something that will enter in production across 2021 and customers that are already in production that are ramping up volumes as I mentioned that in Q4 this year and then consistently in 2021. So again, I think you should expect to have if you want, the kind of linear growth from now to what we disclosed twenty twenty five million more and more, for example, OEMs will enter in production between 2021 and 2022 with the silicon carbide solution for main investors.
Thank you. Thank you, Sandeep. Next question please.
The next question comes from the line of Andrew Gardiner from Barclays. Please go ahead.
Good afternoon. Thanks for taking the question. A couple from me as well. One, I was interested in just your confidence in the rates of improvement in the near term end market. I mean, you've acknowledged that you're more bullish industry analysts covering the automotive market.
And I'm just wondering what in particular is causing you to come to that conclusion? And then also on just another one on silicon carbide. Can you give us any sense as to your win rate there? You've obviously had an early lead. You're claiming over 50% share in terms of current market share.
That strikes me as a conservative statement. But I'm just wondering what your what you think your win rate is in terms of the current RFPs that are out there? Thank you.
I am starting with the second one probably. The first one I will ask you to repeat a bit. On the second one, again, as I mentioned that we have a very large portfolio of programs in which we are working highly disclose that we have today something like 68 new programs. Honestly, this is moving on day by day. We see a lot of momentum in Europe, as I mentioned, where I would say all the premium OEMs are working on new solution with many inverter based on silicon carbide.
There is also a very strong momentum in China and that's why we described the action to specifically made a team in Asia to support leveraging profit leveraging, sorry, proximity with this customer. So we see a large number of customer working on silicon carbide solution. We mentioned BYD that is one of the major partner we have in China, but it's absolutely not the only one. So again, the momentum of silicon carbide is there. As I mentioned, we don't need even more to explain the advantages of silicon carbide in the full electric solution, CarMax are fully convinced on this based on full customized solution that as I described at the beginning.
About your first question, sorry?
Your first question, Andrew, was to have Marco and team discuss why we seems to be a little more optimistic than dentistry. This is the question.
Yes, exactly. I mean you cited the, I presume, IHS or perhaps others in terms of the industry analyst forecast, but you said you're more optimistic. I'm just wondering what in particular is leading you to that conclusion?
No, think we have a very good dynamics with our customer. Automotive is the area of customer proximity. We have a lot of intimacy with major names. So we have the dynamics of our backlog developing for Q4, Q1. So I would say for the 2021, the visibility is good and I confirm what I'm saying.
We expect the run rate similar than what we had in 2019. Of course, the second half, we need to reconfirm the number after the Q1. Again, the visibility is good, but it's better to see the evolution of the dynamics in Q1. But for the first half of twenty twenty one, I would say that visibility is pretty good.
Okay, great. Thanks very much.
Thanks, Andrew. So the next question please.
The next question comes from the line of Stephane Rui from ODDO BHF. Please go ahead.
Yes. Hello, good afternoon.
Actually, have two questions. The first one is a kind of follow-up from the previous question because there are new lockdowns in many countries in Europe. And I just wanted to know if you feel or if you fear any slowdown of the end demand in the short term? And the second question is about silicon carbide and the internalization of the production after the acquisition of NorthTel, if you have some results to share with us? Thank you.
No, let's say for the first part of your question, Stefan, again, the visibility is good. What is giving us a good level of confidence is that inventory are extremely low at this point. We came from the first half of year, of course, low because of the reduction of production. And starting from, as I mentioned, July, but then with a strong push in across September, we see really the supply chain totally revitalized. This was consuming inventories.
And so now the supply chain is in a very good stage. So again, hopefully, the lockdown will not impact too much the sales, but the level of production from the carmaker today is extremely good. And this is across all geographical area. See China extremely strong and we do not have a visibility of lockdown in China. Europe is also in a good stage.
Korea is also very good. Japan is probably a little bit late in the recovery. But as you see, it's very much, let's say, across all the geographical areas, This is giving a little bit of comfort more for the first half at least of 2021. In terms of silicon carbide, yes, let's say the acquisition of Nostel is boosting our ambition to be vertically integrated. We disclosed that we would like to be more than 40% fully integrated by 2024, 2025.
The plan is going. Unfortunately, I prefer not to disclose you all the details for some confidentiality reason, but the plan is going. And by the way, the activity also on R and D in after the acquisition of Northell to move on eight inches, let's say, plan for this technology is going, I would say, even better than our original expectations. So we are very pleased with the result of this acquisition.
Okay. Thank you very much.
Thank you, Stefan. Next question please.
The next question comes from the line of Jean Darmenon from Liberum. Please go ahead.
Hi, good afternoon. I just wanted to ask a little bit about some of your more legacy products and what's going on there. One is on the car entertainment systems where a few years ago at least you had quite a strong position there both in the OEM market and the aftermarket. What is ST's position in that segment right now? And given that car infotainment is also a fast growing area, are you benefiting from that position that you had in that market?
And if so, in what areas? And also at the same time on RADAR, what roughly is the kind of growth rate that you're seeing in RADAR? And can you give us a split on how that's cutting between the 24 gigahertz and the 77 gigahertz part of it? And lastly, if I can, on the auto talk side, are you already in production? And how do you see that growing at this point into the next couple of years?
Thanks.
Yes. I'd say on Car Entertainment, I would say that the aftermarket business is substantially disappearing. The only one that is remaining is some audio. But I would say that now the 100% of the business is directly with the OEM. And again, this is a good business.
It's not growing, let's say, at the same pace that I that we described during the presentation. So I would say that it's growing substantially linearly with the level of car. I would say that progressively the car entertainment business is moving to the infotainment infotainment including connectivity. So we see connectivity becoming really the mainstream for the infotainment and this is overlapping partially with the activity in the entertainment. About the radar, yes, we are not expecting volumes of 24 gigahertz growing.
So I think we reached the peak, I think, term of run rate, of course, because this has been penalized by the lockdown in 2020. But we don't see in term of run rate additional award coming from 24 gigahertz. So this will remain, of course, in production for three or four years, but no new awards are expected. All the increase in the radar is becoming with the 77 gigahertz. On this, we substantially abandon the road map on Vicimos.
And now all our activities concentrated on FPSO high on which we are integrating receiver and transmitter together with the let's say processor to manage the stenia. So again, I think that the FPSO high is gaining advantage against the competition because again on top of the possibility to use CMOS technology, FDSOI is very robust technology, again disturbances and against noise. So it's a perfect technology to master the 77, again, with the possibility to integrate both RF and processing.
And given sort of flattish, probably slightly down on the 24 gigahertz, Is your overall RADAR business still showing very strong growth, say, the high teens or the low 20s or something like that?
Yes. We still honestly see more vision based growing than the RADAR also because of the contents of silicon and the vision based solution. But I would say that the radar business is growing at least at the same pace of the, let's say, market dynamics I gave before for two to 5% compound.
Understood. And then autotox?
Autotox, sorry. No, autotox, we are not yet in production. We'll enter in production in 2021. The first area where we are entering production will be U. S.
And then this will be in Europe. In 2021, there are carmakers that are silently, let's say, producing these in the car to establish between the 2021 and 2022 a network of vehicle to increase the capability of the car to exchange senior.
Got it.
Thank you very much.
Thank you, Jonathan. So now I think we have time for one last question.
The next question comes from the line of Jerome Ramel from Exane BNP Paribas. Please go ahead.
Yes. Thank you and good afternoon. Two questions. The first one, Marco, you used to disclose the revenues in 32 bit controllers in automotive. So where do we stand today?
And the question I have is, if we look at the top three, ReniFat and XP and now Infineon Cypress, they got to be on the lot of revenues or more in 32 bit controllers. Last time you disclosed it, you were in the range of 200,000,000 to $250,000,000 So do you have the scale to compete with the top three in that particular area? And the second question on gallium nitride, when do you expect revenues to increase? And the question I have is your manufacturing relationship with TSMC. If I look at TSMC in gallium nitride in the past with the collaboration of gallium nitride systems, I think they've been very successful.
So what are you bringing to them to make that product successful? Thank you.
Okay. Now in terms of 2B, I would say the 30 2B is an area on top of the ADAS and on top of power technology for automotive that are still growing despite the bad market condition in H1 twenty twenty. So projection for us in the 32 bit for automotive is to exceed, let's say, $320,000,000, $325,000,000 by 2020. So you see that the growth is there. This segment is growing even against 2019.
And definitely in this area, are taking market share. I would say the reason of this is for sure from one side coming from the technology that we're using. And you know that today the Stellar family is based on FPSO and PCM combination. So it's a perfect combination to fulfill the need of the new car architecture. And also the architecture of the product that we are having, the sales today is partially made by our old, let's say, PowerPC family, but then it's complemented by the new family of product based on ARM that are consistently growing.
So I think we have against the competition, we have a proprietary technology, a proprietary manufacturing. And you know how much manufacturing is important for the supply chain of automotive. And we have I think a very good architectural product that is made thanks to the strong, let's say intimacy that we have with the market leader in automotive. In terms of GaN, yes, GaN will start relatively low level of production by 2021 also after the acquisition we have on Hexagon. Major boost in sales will be around 2022.
So what we are bringing with the collaboration of TSMC, we are bringing substantially the automotive the capability to qualify this technology for automotive and industrial application. I think you mentioned advanced system. This technology has been used by GaN system mainly for, let's say, consumer application. I think there is a very strong potential of this technology in industrial and in automotive. But then of course you need to master how this technology must perform and must be qualified in the industrial and particularly in the automotive domain.
So what we are bringing the collaboration with TSMC is exactly the capability and the knowledge that we have in the industrial and the automotive application to be capable to qualify the technology. And again, also in this case, want to mention that it's not only the six fifty volt technology that is the reference of this entity, but it's also the 100 volt that is specifically tailored for hybrid for either application.
Thank you. And for 2022 in GaN, is it more should I understand more onboard charging for European OEMs?
Well, let's say for 2022 will be a combination of the three application if you want. There is for sure some consumer application that are almost ready today, which will ramp in volume in 2021, again also following up the acquisition of Hexagon. It will be partially onboard chargers and it will be also in industrial field, some application related to the charging of professional tool.
Thank you.
Thank you, Johan.
This will conclude our presentation of today. As a reminder, the schedule for the next segments of our twenty twenty Capital Market Day is as follows: Analog, MEMS and Sensors Group, November 20 and overall strategic update, December 9. Thank you for your attention and interest in ST Microelectronics, and stay safe.